The trade war hit my farm and greenhouse business here in northwest Missouri on March 4. The first email I received that morning was from the Canadian company that supplies peat-moss-based potting soil for our geraniums and petunias. Because of the new tariffs, the potting soil being shipped that morning would cost $1,750 more than I had expected the night before. But on March 6 we received the invoice and found that it didn’t include the tariff because President Trump had temporarily suspended certain tariffs. Who knows what will happen next? We buy six truckloads of potting soil a year, so if Mr. Trump reimposes these tariffs in April as he has threatened, we’ll face an annual cost increase of about $10,500.
Our part of Missouri is known for its native walnut trees. I recently contracted to sell $8,000 of hardwood lumber from walnut trees on a farm that my son and I own. According to a sawmill manager I talked to, most walnut lumber enters the export market, which has collapsed because of Mr. Trump’s tariffs. I won’t cut my trees this spring as I had planned, and what could have been a windfall for my family has disappeared.
Like peat moss, nearly all the potassium fertilizer, or potash, I use on my farm comes from Canada. The tariff on this essential fertilizer will be 10% beginning in April—another $2,500 contribution from our farm to the trade war. In his recent address to Congress, Mr. Trump urged farmers to “have a lot of fun.” I’m working on it, but am struggling to find anything fun about tariffs.
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Sometime this summer, I’ll order a container load of nursery pots from China for our 2026 greenhouse production. The additional tariffs on this purchase will be another $2,500. I don’t know why U.S. manufacturers don’t make large pots, but I guess maybe the end result of all this will be a revitalization of the flowerpot industry in the U.S. No country can long survive without making flowerpots, and there’s at least some chance that my complaints will pale in comparison to the benefits of reshoring the nursery container industry.
Imagine you woke up one day to discover that someone had invented a small, inexpensive contraption that could make anything you needed—food, clothes, appliances, whatever—with the push of a button. Would your life be better as a result? Would your current income go further? Would your job be easier? Would you have more free time to do the things you wanted to do, instead of the things you had to do?
For most people (including me), the answer to those questions would be yes. Many would, of course, still be concerned about all the people who worked in industries now made obsolete by the miracle machine, and they might worry about the environmental implications of suddenly disposable stuff or about the machine’s origins. But on the simple question of whether instant, free access to most of our daily necessities would make us better off, it’d be a no-brainer response for the vast majority of the American population.
Then again, maybe not?
I’ve been thinking about this hypothetical—standard in many economics classes and Star Trek conventions—a lot in recent days, as Republicans and their allies have shifted from saying President Donald Trump’s tariffs won’t raise prices to saying that, well, maybe high prices aren’t so bad because who really needs cheap stuff after all. Most prominent in this regard is Treasury Secretary Scott Bessent who in early March acknowledged the potential for tariff-related price hikes but added, “Access to cheap goods is not the essence of the American dream,” which is instead “rooted in the concept that any citizen can achieve prosperity, upward mobility and economic security.” He’s certainly not alone.
I have a short piece pushing back on such assertions in The Atlantic this week, but that article leaves out a lot of detail that Capitolism readers have come to know and love (right?!). And because Bessent just doubled down on this new economic message over the weekend, I want to expand on why cheap stuff—whether imported or domestic—isn’t the “American dream” but sure as hell helps us achieve it.
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Protectionists routinely denigrate these benefits [of trade] as merely saving a few cents off a cheap T-shirt or toaster, but as I noted in the piece, those pennies add up: “Overall, studies conservatively estimate that American households save thousands of dollars a year from the lower prices, increased variety, and global competition fomented by international trade.” Even the much-denigrated China Shock provides such gains, as I summarized in a recent essay: “For each percentage point increase in Chinese imports, consumer prices fell by nearly 2 percentage points, with savings from both imports and domestically produced goods (thanks to heightened competition).” That translates (well, it translated) into hundreds of dollars a year in annual savings for each U.S. household—gains disproportionately accruing to middle- and low-income Americans because “the most affected products were those often sold at big-box retailers, such as Target and Walmart.”
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The denigration of “cheap” things also ignores their clear role in improved human well-being. As detailed in this excellent new essay on how pineapples became commonplace, things we consider cheap and mundane today were often once luxury items—and it’s the very process of “cheapening” something, via generations of international trade and technological innovation, that raises our living standards over the long term.
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Trade is also important for Americans’ leisure and economic mobility. For starters, disposable income—money we have left over after buying “cheap” necessities—can be invested in things such as education and retirement or can be saved for a rainy day or for a big important purchase like a house or a fun family vacation. A trip to Mexico, in fact, is an imported travel service, while the planes we take, the clothes we pack, and the suitcases in which we pack them contain imported parts or come from abroad. Local leisure activities—video games and streaming services at home, sports and outdoor recreation nearby, etc.—also depend on “cheap” imports (and often foreign creators).
Just as importantly, trading for necessities instead of making them ourselves means that Americans have more time to enjoy these things or to do more productive things like learning a new skill or training for a new career. As I noted in The Atlantic, in fact, a new study in the Journal of International Economics, found that “between 1950 and 2014, trade openness contributed to an additional 20 to 95 hours of leisure per worker per year,” owed to the higher real incomes trade produced. In the authors’ no-trade alternative, meanwhile, we’d have to work 20 more days per year to compensate for the annual income we’d lose due to a complete shutdown of trade.
Yikes.
Phillip Cross urges Canada’s government to “beat Trump’s tariffs by waiting them out.” A slice:
The best strategy is to call Mr. Trump’s bluff and dare him to impose and maintain higher tariffs. There’s no chance that auto production can be shifted to the U.S. in one year, let alone by April 2, when the 25% tariff on auto goods and many other Canadian products is scheduled to go into effect. The tariff could cause U.S. vehicle prices to soar by as much as $12,000, according to the Michigan-based Anderson Economic Group, as auto parts cross the border several times during assembly.
Let Mr. Trump explain to Americans why they are paying 20 to 40 cents more for a gallon of gasoline—the result of his planned 10% tariff on Canadian oil and gas—and thousands of dollars more for vehicles. Consumers and the Federal Reserve are already worried about inflation accelerating, the opposite of Mr. Trump’s promise to lower prices on day one. Even absent higher prices, there is limited public support for tariffs on Canada. A Jan. 28 poll by Innovative Research Group found that 76% of Americans, including a majority of Republicans, don’t support a 25% tariff on Canadian products.
[DBx: If I, an American, were interested only in my or my fellow Americans’ narrow material interests, I would hope that Canadian officials ignore Mr. Cross’s advice. The reason is that retaliatory tariffs imposed by the Canadian government on U.S. exports – which really are taxes imposed by the Canadian government on Canadians who buy imports from the U.S., but which do also further reduce U.S. exports beyond the reduction that naturally occurs when U.S. tariffs are raised – will put more political pressure on Trump to reduce U.S tariffs. And any reduction in U.S. tariffs would be in my and my fellow Americans’ best interest. But because I don’t believe that the interests of Canadians should be sacrificed to help Americans, I sincerely hope that the Canadian government doesn’t retaliate against Trump’s tariffs punitive taxes on Americans who purchase imports from Canada. One crazy feature of trade wars is that each government acts as if its motto is “Put Foreigners First!” Each government threatens to punitively tax its own citizens and impose economic damage on its own economy unless and until foreign governments stop punitively taxing their citizens and imposing economic damage on their economies.]
Jon Miltimore reflects on a reflection on power by Frank Herbert.
Here’s David Henderson on DOGE (and the late Alan Simpson).
In this long essay, Sally Satel decries the politicization of the practice of medicine.
